Stock Picks: Brazil Iron Giant: Vale S.A (VALE)

November 23, 2020, 9:06 am EST

Stock Picks: Brazil Iron Giant: Vale S.A (VALE)

Natural resources are the key to provide all necessary material for economic development such as infrastructure, railroad, building, etc. Vale S.A (VALE) is a Brazil mining giant with 65 billion market capital that engages in the production and exportation of iron ore, pellets, manganese, and iron alloys, which are raw materials needed for steelmaking. 

Although the 2019 January Brazil dam disaster caused more than hundred deaths that VALE is responsible, $4 billion settlement could put this bad news behind which is considered a low price to pay. In addition to this news, there are other highlights that give VALE a potential winner for its stock performance for months to come:

  • Rising iron ore price and higher demand worldwide on steel injected 133% earning growth in the recent Q3 earning report
  • Technically, 11/16 breakout with a gap-up setup on high volume is another hint that a new uptrend could start
  • The Material sector (XLB) is near a new high level since April 2020 for the past 6-7 months. This sector is also among one of the strongest sector that VALE belongs

Price level 12 could provide support during pullback. Below 12 should trigger sell-stop to exit the position for risk management.

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